 Welcome to 25 by 25 Michigan's Renewable Energy Ballot Proposition. This event is sponsored by Closeup, the Center for Local, State, and Urban Policy. I'm Barry Rabe, a faculty member here at the Ford School, and as of July 1, the Director of Closeup. We also want to thank the Domestic Policy Corps here at the Ford School for their co-sponsorship, and also the Citizens Research Council of Michigan. There's a certain irony, a very nice irony in fact, in that we are finally finding ways for the Ford School and the CRC of Michigan, which were founded almost at the same time early in the last century, to begin to partner. These are two institutions that have a long-standing history of interest and engagement on issues of state and local governance, particularly in the state of Michigan. To our knowledge, this is the first time we've ever done a formal kind of partnership quite like this. We're very delighted to welcome Eric Lucfer, who will be our lead speaker today, one of the senior researchers at CRC, and President Jeff Guilfoyle. First just a few words about our format and then introductions, and then I'm going to turn things over to Jeff. One is we will have, as we proceed, cards. You may have already seen those as you came in, but we want to, after the presentation, allow for Q&A. One of the ways that we've done this traditionally at these events is allow you to fill in note cards that ultimately will be filtered down to me. I will be in something approximating the CNN debate moderator role, working through various questions and posing questions, and so we'll be following that format. So it's not too early to begin to think about questions that you might want to raise, but there'll be opportunity to get these cards out and circulate, and we'll try to leave as much time as possible to allow for Q&A. I also want to make note that the report that the CRC has published on this ballot proposition for which Eric is the lead author, Eric Lucfer, is available not only through the CRC website, but we have a link through the close-up website here at the Ford School. So we want to make that available to as many people as possible. Also want to note that it is ballot proposition season, aggressively so in Michigan, and questions invariably emerge in terms of financial support and the like, and just for the record, the center has not received and has not accepted any outside funds for the organization of this event, and neither the center nor its staff have taken a position on this issue. We wanted to have an earnest debate over this fundamental question about the future of energy governance in Michigan. So just simply wanted to note that, and also want to acknowledge thanks particularly to Bonnie Roberts, our project coordinator at close-up, and the Ford School facilities and computing staff for their help. Brief introductions. First, Eric Lucfer, who's already been mentioned twice in this introduction, is the director of local affairs at the Citizens Research Council of Michigan. Eric may know more about Michigan local governance and certainly ballot propositions than any other Michigander. He has the unenviable or enviable challenge of making sense and discerning and distilling and trying to present in an accessible way ballot propositions across the board as they emerge. And in this year in particular, Michigan is looking at a very diverse, really a bumper crop of these. As I mentioned, he is the lead author on the report and will be presenting key findings from that report to launch our conversation. He will be followed by Sanya Karle, who we welcome, who's an assistant professor at the School of Public and Environmental Affairs at Indiana University. Sanya has emerged as a leading national scholar on state energy policy formation and implementation, a wide range of very active and engaging questions that she is raising, including many of the policies that are highly relevant to the conversation that we are having today. She's also the author of a pair of just terrific articles in the review of policy research, Environmental Politics and Energy Politics Journal, in recent years looking at the state experience with renewable portfolio standards, which is very much central to this conversation, and related policy tools as well as issues of possible federal adoption of what exists in a great many states now. So we're very glad to welcome you from Bloomington, Sanya. And also delighted to welcome Tom Lyon, the Dow Chair of Sustainable Science, Technology and Commerce with appointments in the Ross School and the School of Natural Resources and Environment. Tom is formerly the director of the UM-Herb Institute for Global and Sustainable Enterprise, and he has made major scholarly contributions in many areas at the intersection of energy and environmental concerns, including some very important work on corporate environmental strategy. Here what I would only note among his many publications is perhaps the best single article that I have seen on the political economy of state government decisions to adopt these portfolio standards. That was published in a 2010 article in the Journal of Energy Policy. So we are very, very well represented with this range of expertise today. Welcome to Tom. And finally, I'd just like to welcome and introduce Jeff Gilfoil. As noted, Jeff is the president of the CRC, and this really is a nice moment for a unit that the Ford School has had some connection and relationship, including placement of students and interns, to think about other ways that we might come together and the like. And before we turn to our three primary speakers, I wanted to turn things over to Jeff and offer him an opportunity to comment as well. Thank you. Thanks. It's a pleasure to be here, and thank you for the opportunity to partner on this. I just want to give a brief commercial for CRC for those of you who aren't familiar with us. So the Citizens Research Council was formed in 1916. So it's been in Michigan 95 years. Our goal is to inform the policy debate and have better government in Michigan and do that by providing a source of non-partisan information on important public policy topics that policymakers and voters can turn to where they're comfortable that the information isn't being spun. It's just sort of being presented in a straight fashion so that you can make decisions that are consistent with your own values. Our primary output is research reports. They're all available up on our web page for free to be downloaded. We focus on issues that are specific to Michigan, state and local issues specific to Michigan. It's not academic research. It's designed to be immediately useful and accessible by people who are interested in having an impact on policy in Michigan. We also work directly with government officials. We give a lot of presentations around the state on various policy issues. We have an email list. So if you go to our web page and sign up, we'll send you an email whenever we publish a paper and give you access to that or you can follow us on Facebook or Twitter. Some of our recent work, we've done a lot of work recently on K-12, how schools are governed in Michigan, how they're financed, charter schools, a lot of the topics that have been in the news. We do a lot of work on government efficiency. So if you're interested in things like what's involved with emerging to governments or government collaboration on services, we've done work on that. We've done a lot of work on the city of Detroit's fiscal issues. So if you're interested in Detroit finances, I encourage you to go to our webpage and look at that. And in particular, we've done research recently on the six statewide ballot proposals. We don't take a position for or against the ballot proposals. So if you're interested, these proposals have a significant impact or have the potential to have a significant impact on state public policy. So I encourage you to go to our webpage and check out the ballot proposals. Again, we don't advocate one way or the other. We just try to present what they do and you can make decisions consistent with your own values. And with that, I'm going to turn the presentation over to the author of one of these ballot proposal write-ups, Eric Luffer. So Eric, I'll turn it over to you. Thank you, Jeff. As noted, our website is right there, crcmich.org. So if you do have interest in finding these, that's where to find us. I usually take two minutes going through this slide that's done now. So I'm right on my schedule for my 15 minutes. As noted, this year we have the most ballot questions since 1978. Five of these are proposed constitutional amendments. The first one is a referendum on public act four, which is the emergency manager law, also controversial. Proposal two is a question of putting the right to collective bargaining into our constitution. We're going to talk about question three today. Question four is an issue on the quality home care council and limited collective bargaining rights for in-home care workers. Question five is a supermajority requirement for new taxes. In question six is this issue, if you've turned on the TV, you've seen the beloved ads from Maddie Maroon on building a new bridge. So as we have the papers on our website, I encourage you to find them and do your homework so we know what you're voting on. It's going to be a long ballot. You should be prepared when you get in, not finding this information for the first time when you get to the bottom of your ballot. So let's talk about proposal three. This is an issue to put into our constitution requirement that our utilities provide at least 25% of the electricity from renewable sources. It's going to be scaled up so a little bit each year, ultimately by the year 2025, we should be at 25%. Within the definition in that proposed constitutional amendment, renewable energy is defined as that that naturally replenishes over a human rather than a geological time frame. And they go on to say that in their definition, that includes wind, solar, biomass, and hydropower. It provides that the electricity provided in retail sales must be produced from facilities located within Michigan or within the customer service territory of any electric utility, municipal-owned utility, or co-op. I know what within Michigan means, but what does it mean to be within a territory of a utility? You can see down in the bottom left corner, Southwest Michigan, where Benton Harbor is the little orange share. That is Indiana, Michigan electrical power that extends into Indiana. And so the idea is there that that utility can produce the electricity anywhere in Indiana in their territory and sell it to Benton Harbor and those people served by that down there. Similarly, up in the upper peninsula, those red and green shaded areas, those are utilities that extend into Wisconsin. The same rules apply there. So most of the energy will have to be produced in Michigan, but there are some exceptions provided in the law. The Constitution would also say that these utilities are to scale this up. And in doing so, the price of electricity produced from renewable energy cannot increase by more than 1% per year. And I think for the most part, I'm not electrical engineer, I don't work for the utilities. What I have been able to learn is that they're gonna have a hard time keeping within that 1%. And so it's likely that staying below that 1% would push attainment of this beyond the year 2025. That's provided for, and that's the sort of customer protection that was tried to be built in. It also says that the legislature in enacting laws to implement this is to promote and encourage the employment of Michigan residents into use equipment manufactured in Michigan. So pretty basic to encourage employment. And the idea then is if we have facilities producing windmill or producing solar panels, those are to get preference in the legislature as opposed to promote that. It's not quite clear how successful any state is in trying to promote job creation through legislation like this, but they're trying. So what do we have so far? Let me put a little lay of the land so we can have some context where we are now and where we're going. A number of states have implemented these renewable energy standards. Michigan is one of 30, 29 of our states have it. And it was all done, the federal government attempted to tackle this issue, failed and the states seeing that failure have tried to fill that void. In Michigan, that came about in 2008 with the Public Act 295, which requires that the state generate at least 10% of renewable, 10% electricity from renewable sources by the year 2015. The actual law as you would suppose goes into far greater detail about what a renewable source is and what counts and goes into great definition. It says that we can use hydro power but we can't build new dams to capture that hydro power. It allows energy optimization and advanced cleaner energy systems, which I don't think would qualify for this constitutional amendment. It's a small piece of the pie but when you're a utility trying to meet this standard it's probably an important piece of the pie. So we are a few years into implementation of this and this chart shows, this is from the Michigan Public Service Commission. It shows that we evidently are well on our way to meeting that 10% standard. Based on the contracts let for the major utilities, by next year we should be at about 8.4%. And again, the target there is 10%. So another two years after that and we should at least be at 10% if not higher. This again from the Michigan Public Service Commission, it shows where our utilities were getting their renewable sources prior to enacting of this law, prior to implementation of the standard. This is from the year 2011 and recalling that last chart, we weren't very far into implementation of this. You can see most of it as our base was coming from biomass, hydropower and wind and landfill gas were making up the other big pieces of the pie. What's happened since then is we're getting about 94% of our new renewable energy power from wind. If you've gone up in the thumb area, if you've driven along the west coast of Michigan, just south of Luddington, if you've gone right up the middle of the state through Gracia County, you see these windmill farms with the blades turning away, hopefully the wind's blowing to turn them for you. And the main cause of this, the main economics of this, it's far cheaper to put up windmills than to invest heavily in these solar, landfill facilities. There's limited capacity, limited ability to get energy out of any of them. But given that landfill or the wind gives you the opportunity to do it in a cost effective way. So what are the issues to consider? That's kind of the lay of the land where we are now, where we're going. As you consider this proposed constitutional amendment, what are some things to think about? Well, first of all, is this issue, and if you've seen the ads for this, I think they glean onto this, is this really a constitutional, an issue worthy of amending our constitution? Citizens Research Council's been paying a lot of attention to our state constitution, and this is not the first time that we've had issues that are of marginal quality to go into the constitution, not to say this is a good or bad issue, but is it really constitution worthy? And when we think about whether that fits that bill, we talk about the state constitution should define the basic organs of power. So the constitution should say, we have a state government, we have school districts, county cities, there should be a separation of powers. It should define the basic principles that these are the things we believe in how we have taxing power and things like that, and it declares the rights of the people. So some of those are redundant from the US constitution, some of them are separate to ours, things like crime victims, bill of rights, and things like that, we put into our constitution. That document should be economical and compact, so it shouldn't go into great detail helping you to understand how a law should be implemented, but to find what that law should be and then tell the legislature they are to implement that. Details should largely be avoided, so it kind of comes hand in hand with the second one, but the difficulty in putting great levels of detail into the constitution is as things change, the only way to fix that is to have another constitutional amendment, which again requires putting the question to the voters, which is a very expensive and time-consuming process. Given that, I would ask you whether this, our proposed constitution fits the bill of being clear and concise without going into detail. It certainly isn't as long as the legislation, but there's a great level of detail there and would be one of our longer provisions in our constitution if adopted. Other issues to think about whether it fits into the constitution. This whole idea, I mean, we've had renewable energy forever when you burn a log, you're doing biomass when of course the Dutch have long had windmills and hydropowers as old as we are, so we've long had renewable energy, but this whole movement of investing heavily in renewable energy and these standards the states are adopting are fairly new and we're not quite sure that we can get there. I think for the most part we are, but putting into the constitution before we really have thought that out may be putting the horse before the cart, so to speak. We know that renewable energy is a very fluid and the science is evolving as we sit here. There's new ways of thinking about doing these things and so when we define it as wind, solar, biomass and hydropower, are we precluding something that's gonna be the new science in 20 years or 25 years? Are we gonna have to amend the constitution so the utilities will be able to take care of that or include that in their portfolio? The other question, if you've watched the, at the federal level, this whole issue on the Health Care Act, it's a similar issue here. Should the government, should a constitution compel activities? In putting this into the constitution we wouldn't be defining the basic power, we wouldn't be creating a structure of government, we would be telling a private company, several private companies, they are regulated companies but they are still private companies for the most part that they should start doing an activity. They should start selling electricity from their renewable sources and if they fail to do that what does it mean that they would be unconstitutional? Is that worth anything more than a slap on the wrist? When a governor does something unconstitutional the courts can come to him and tell him to stop doing that or when there's an unconstitutional action usually there's a clear remedy. What would be the remedy in this case? It's not quite clear. There would be compliance issues to think about. Some of that would be clear because we have this act already in place but they didn't quite use the same wording and from this constitutional amendment to what the law says and it really begs the question of whether they meant to use different language and if so what does that mean? Determining the cost, what fits under that 1% is going to take some doing. Clearly windmills and solar panels those are the cost of implementation but what about the cost of transmission if they have to put up new lines? What about the cost of technology for balancing conventional power and renewable power? All those types of things are gonna have to be considered. The proponents are using this as a way of create jobs. They want to manage the externalities associated with coal, think how it affects the health and environment. They want to cut down the amount of money that's going to other states when we purchase coal and have to ship it back here. But really in doing so we have to ask whether that's a wise investment. Clearly when you put up these facilities you're getting energy from nature so there's no cost, we don't have to purchase wind to come into Michigan like we do for coal but there are other costs associated with that. The first one for the utilities is a lack of reliability. The wind isn't always blowing and when we need energy the most in the middle of summer when the air conditionings are blowing full blast is usually when the wind's blowing the least. So for the utilities there's that balancing act that they have to struggle with. At the same time that we're doing this natural gas prices are plunging. The ability to engage in this fracking activity get energy that we haven't previous gotten to been able to get to. So that's changing the equation. Even though we don't have the health problems associated with burning coal there are negative externalities with this with the whirring of the blades and the light strobing through the blades and so on. And then this whole issue of where are we gonna put these? We've already put the windmill farms in their best locations. Where's the next best and who's going to be affected by that? So let me just wrap up with that and I'll turn it over to the next speaker. We will indeed move into Q and A. I believe that the cards are being collected. Actually while they're coming down I'm gonna pick up Tom on your last slide and the question of energy efficiency and just offer a question to the panel about this issue of energy efficiency fitting into portfolio standards and the like because my understanding is in some states there's been some cross fertilization or engagement of energy efficiency as a sort of a counter way to do that. Does that figure in the Michigan case does that figure in other cases? How do we begin to think about energy efficiency as a supplement or alternative to renewable energy whether in this case or in other contexts? I sort of think Sanya's best position to answer that. I can give you what we've seen the experience across other states and that is at first a lot of states started to fold energy efficiency into their RPS and then they as I mentioned in my presentation they realized that they weren't actually pursuing energy efficiency instead they were actually the utilities were still just pursuing the renewables. So what we've seen more recently is that states have adopted a completely different policy which is an energy efficiency resource standard. And so now we see I believe the number is about 23 states have an energy efficiency resource standard that resembles entirely the RPS but is designed specifically for energy efficiency. The finding being that they don't really work well together. As to how it fits into Michigan's experience. Do you want to take that over? Oh, just I think the point here is that the proposal proposal three doesn't reflect an energy efficiency component of dealing with our energy needs going forward. So there's projected energy demand but there's a question of how much energy efficiency should we take into account to accurately forecast how much demand is going to be in the coming years. And that will feed back to the question of how much additional capacity do we need to build. And that comes back to the stringency question. You know, if demand were going to be met largely through energy efficiency we wouldn't need much new capacity. And that then means that the renewables requirement is more stringent than it might look like otherwise. All right, thank you. Let me begin to work through some of your questions. In fact, there's actually two questions that overlap a bit with the question that I just asked. And actually Tom, this builds on the second question from your slide, natural gas. Why are we not using more natural gas from landfills and developing gas through drilling for oil? What is the future of natural gas in this changing marketplace and how might that make us think differently about the future of energy in Michigan? I don't really know why we're not using more landfill gas. Do we know we're using the wrong amount of landfill gas? And I think honestly we can't really solve our energy problems with landfill gas. We should use as much of it as we can, but we're still gonna have to do a lot of other things. What was the other part of it? Getting natural gas. So getting natural gas as a byproduct from drilling for oil? I'm not quite sure what the question is. Part of the, I think part of the problem is that oil is not a direct substitute for this renewable energy. We're talking about electricity versus transportation if we're comparing oil to renewable energy. So oil's not the option. Natural gas could be something that we would consider as well. Landfill gas, is it even built into the current legislation that landfill gas is eligible? It is. And that's something that many states have had difficulty pursuing. Who owns the landfills? How do they comply? Are they allowed to purchase or sell renewable energy credits? These are all questions that different states have encountered and struggled with. Thank you. Another question. Without RPS standards, would states still choose to develop renewable energy? Or are RPS standards key in creating a renewable energy market? Well, I think I showed the one pie chart that showed how much where we're getting renewable energy currently. It's a small share of all the energy produced in Michigan. But in the absence of a standard, Michigan utilities were investing in renewable energy facilities and producing electricity in ways other than the conventional. So maybe not to the level that we would hope for, but in the absence of standards, I think you can clearly make the case that they would do some. Well, there's also the question of what would the policy alternative be if you didn't have a renewable portfolio standard? Suppose you had a stringent carbon tax. Well, that would definitely induce renewable investment. But failing that, if we have no policy to drive renewable energy investment, then we will get very little of it. It basically comes down to economics. It's the levelized cost of electricity. And we're comparing renewables, which traditionally are higher in cost, than fossil fuels, which traditionally are lower. Over time, this is the case with any emerging technology, we see the cost of these technologies come down so that they are cost competitive. Could this have happened without a policy? I would argue no, unless we had some alternative policy that was adjusting those costs. Now, we're talking about state policies. What about the federal policies that have subsidized windmills? And how would that play in the absence of a state policy? There's still the federal subsidization of windmills. Do you think that would, how does that play into this whole equation? It's a good question. There is definitely some support there. My sense, and I don't know if I've seen a paper that really parses out the effect of the production tax credit as opposed to the RPS. But my sense is that RPSs have done the majority of the work in driving renewable investment. But I guess I can't point to a study that shows that for sure. The closest I've seen is studies that actually look at the on again, off again nature of the production tax credit, which is the credit that we're talking about. It's a national level credit. And every time this credit elapses, we see a distinct nosedive in wind development. And so there's clearly some kind of causal relationship here between development and the production tax credit. However, as was just explained, with the RPS happening simultaneously, it's very difficult to parse out which policies were responsible for which amount of renewable energy. A question on climate change. Asking how much of an impact this kind of a policy would have on greenhouse gas emissions, ultimately on climate change. And some of the larger issues associated with that, how one begins to put this into a climate conversation. Here, mindful that there have been proposals in all recent Congresses to create a national version of an RPS, or clean energy standards. Simon, you've talked about this and written about this. How does one begin to think about the climate or the greenhouse gas ramifications of the kind of policy that we're talking about? This is a fun question. So the problem with renewable portfolio standards at the state level is that we have such a patchwork of different policies. And the difference across state borders with these different policies leads to unintended consequences or unintended effects of these policies. And so to give two examples, we have free writing and we have carbon leakage. And so free writing happens when one state does not have a policy and boarding states do have an RPS. And as a result of being the state without the policy, they're able to erect wind turbines and then sell the renewable energy credits across state lines and profit off of their neighbors. So not being proud of coming from Indiana, this is exactly what Indiana is doing. The opposite is the case with carbon leakage. When a state enacts a policy, they increase the amount of wind, let's say, development that they have or wind generation. And as a result, their excess electricity, let's say their coal electricity, becomes significantly cheaper and they therefore are able to export it over state lines to other states that don't have the policy. And so these are both examples of what happens when we have differences across states when electricity is the flow of electrons, they move back and forth across state lines. And so this patchwork is essentially causing this inconsistency, which is causing problems. It's, I think I'm going in a roundabout way of basically saying this is an energy policy, a state level energy policy is not the same as a national level climate policy. We have climate implications of this patchwork of state policies. So let me pick up on that. Even if we had a federal renewable portfolio standard, economists would normally say, this is not the best way to solve the carbon problem. The way you want to do it is put a tax on carbon or cap carbon emissions in some way and then allow that to be traded. So we don't do that. And an RPS is a second best policy. Part of the problem is RPS is tend to substitute renewables for natural gas where what we'd really like to get rid of if we were trying to solve the climate problem is coal. So some people think that's not true. We shouldn't, either we should not be getting rid of coal or renewables don't substitute for natural gas. But the work of Dallas Palmer, at Dallas Bertron, Karen Palmer at RFF suggests that that's exactly what happens. Could I speak to that? Well, I don't know, Barry. Do we have people in the audience speaking to questions? Sure, take a quick comment from the audience. So I don't disagree with that. I just think it's a separate point. I mean, the point is we want to try to do a good job of bringing natural gas out of the ground and not waste it. And I think it's true that fracking offers a greater risk that there will be gas leakage around a well than traditional drilling does. So it's certainly a consideration. Barry, the other part of this, going back to your question, how much can it reduce the pollution related to coal? Some of the studies I was able to read in my research and talking with the utilities, granted they have their own backs to grind in this. But they don't, because the wind's blowing because we have a windy day, they're not turning the coal plan off. They're powering it down a little bit, but they're still burning coal. It's kind of the metaphor of the tanker out on the ocean. You don't start and stop it on a dime, and so it's true with the coal plant, they're gonna keep burning that coal whether the wind's blowing or not. I understand the technology is evolving now that they're better able to manage that. But because we have more windmills because it's a windy day, does not equate to burning no coal. I think that's a really important point, which goes back to the observation that wind tends to substitute for natural gas instead of coal because it's much easier to turn a natural gas plant on and off. Both wind and natural gas are intermediate resources. So we have a base load, we have intermediate load, we have peak load, and wind and natural gas tend to fill that intermediate load quite nicely, which is why they are substitutes for each other. I'd like to turn to the constitutional issue. There are at least three questions. It looks as if there's some collusion in the audience. They're worded somewhat similarly, but I'm gonna provide a hybrid of three questions. How many other states have written some form of an RPS into their constitutions? And what are the particular provisions or ramifications of going the constitutional route versus legislation or statute? It's a short answer. Michigan would be the first to put it in the constitution and the ramifications are, as we saw the slide on how states on a regularly basis are updating and tweaking and modifying. In order to do that with a constitutional provision, it requires a separate vote and either the legislature putting another question on or another petition process. Now it's possible that while this is fairly wordy by constitutional standards, it is fairly broad in saying wind and hydropower and solar. So it's possible that some tweaking might be done legislatively, but in terms of going beyond 25% in terms of a number of those types of issues, another vote would be required. Only a small handful of states have adopted an RPS through a ballot proposition. In research, only one study has actually looked at whether or not this affects the effectiveness of the policy and they found that it really is completely irrelevant how the policy was adopted in the first place. And one related constitutional question. Is there any correlation between legislative gridlock and the amount of constitutional amendment activity we're seeing now in Michigan? Go for it, Eric. I think, yeah, there's a high level of correlation. What we have now is severe polarization in our legislative branch and government generally. And what happened in 2008 was that they were able to get people in a room interested parties, the utilities, the environmental groups and others that had a cared about this in one way or another. And it was a legislative process as you would imagine. There was give and take, there was negotiation and ultimately they agreed on 10% in a fairly short implementation standard. They had to have a give and take on what would be included, what renewable sources counted and which didn't. The outcome of that was that some of the groups that didn't get as much as they wanted in this process ended up going this petition route to say 2008 just wasn't far enough so we need the people to vote and make it more stringent. And I think when we look at the other questions that are on the ballot, the collective bargaining provision, this home healthcare worker, the two thirds of increased taxes, all those are emblematic of the polarization and one side we're trying to instill their point of view on everyone else rather than going a legislative route, they're going the route of the constitution. Just to add to that a little bit, at the time of the public act 295, there were a lot of elements involved. Just as Eric was saying, one of them that I think was very important to the utilities was they wanted to undo retail rate competition. So that had been put in place in I believe 2001 and so part of what the utilities got in exchange for accepting the renewable standard was they didn't have to deal with retail rate competition any longer. Two questions, a series of questions actually on economics. One being the estimated job creation in Michigan of proposal three is passed and with that a question on in-state versus out-of-state generation and how that would operate under this provision, both in terms of economics but relating to job creation, the job components and job aspects. I know Sonny you had some reference to that but anyone want to respond to that question? I didn't entirely catch what the question was. First of all the estimates of job creation on Michigan of proposal three is passed and then trying to weave in one other question. Does all the electricity and all the new job activity for this come from within the state of Michigan or is it possible for Michigan to import some of the electricity which could have some impact on job creation if it's produced in another state? Well starting with the latter, the way that renewable energy could be produced out-of-state and count towards Michigan's RPS is only if the utilities have service territories outside of Michigan and therefore they could build let's say wind farms, wind turbines outside of the state. Otherwise as far as I understand the language is that the renewable energy must be produced within the state and as far as the state can do so they need to make sure that the manufacturing as much manufacturing happens within state as well to support it. And Eric spoke to that right off the bat pointing out the territories of some utilities that are mostly in other states but could sell into this because they have a presence in the state of Michigan. I think it's also useful to go back to something that Sonia was pointing to a little bit earlier which is the patchwork quilt effect. We have 29 different RPSs that aren't really coordinated and a lot of times each state is thinking well I don't want my money to go to another state I want all the money to stay in Michigan I'd like to secede if I could. And the notion of the commerce clause in the United States is we create one great big market and we trade so I don't have to buy typewriters that were made in the United States. I buy a lot of typewriters and I don't even have to buy cars that were made, I said most spoke I don't have to buy typewriters from the state of Michigan. I don't even have to buy cars from the state of Michigan and normally economists think there's a lot of efficiency gains to be had from trading across states so I think it's a little bit unfortunate the way the states are trying to put these protectionist clauses into their RPSs that make it hard to trade across one another. The other part to keep in mind with this for every job gained in the renewable energy there's the potential of offsetting jobs and conventional fuel so if we're purchasing less coal than some transportation costs or some costs related to that jobs related to that. So I don't know enough about it to know what the offset is. Are we just breaking even? Are we creating more jobs with renewable energy? But it's not solely a gain by investing in renewable energy. The slide that I showed about job effects with the estimate of the way at all paper the meta analysis they actually did account for jobs lost within the fossil fuel industry so their estimate with a 30% RPS national RPS was that it was a job gains by four billion. Given the large number of portfolio standards in place around the country what are the best practices? What are the best cases? And how close does Michigan come to the best practice model? It's funny because the best practice is to have a lot of renewable energy to capture so if we had all the sunshine of Arizona and all the wind of Texas we'd be much better off but it's hard to import that and we just have to do the best we can with the resources we have. I'm assuming this question is designed not just to the resource issue but sort of design of policies because of the many, many ways you can set these up. Are there? My point being that even with the Cadillac policies you're limited with the resources you have. Although Michigan does have pretty good wind resources compared to most other states. So I haven't really done an analysis of the structure of all the different RPS's but my overall impression is this is one of those areas where Texas actually did a really good job. They wrote a very simple, I think it's just a two page RPS. They got a very clear penalty for failing to meet it and it's worked very well. California wrote a long messy RPS where the penalties for failure were not clear and it's much harder to figure out even how the game works there. So my impression is Texas maybe has the gold standard on this. I think so. Yeah, I would say very clear legislation just repeating the same point as well as very strong penalties to have language that is very specific about which utilities must comply to remove all escape clauses and exemptions or exceptions just to make it a very straightforward policy that is specifically tailored as much as possible to the state circumstances. And just would note, Texas really does emerge as an interesting case for many, many reasons. It's one that was initially passed, I believe, in 1999 but with a reauthorization and a much higher target in 2005 and so it sort of passes that component of what you were talking about, Sonia. The growth has been really quite large. My understanding the costs have worked quite well. It's also interesting from a cross-state standpoint what you were talking about, Tom. It's one of the relatively few states that given the configuration of the grid is relatively autonomous. It's pretty hard to export and import electricity independent of sovereignty and secession issues to be merged historically in the case of Texas. So interesting that we'd be bringing that case up. A couple questions, we're actually running very low on time. Couple questions on benefits and how cost analyses take account of indirect costs for fossil fuels, either health costs because of exposure to air pollution or how one begins to calculate benefits, health benefits and other benefits from renewable sources and whether or not any of the studies that have been done have systematically calculated these kinds of costs and benefits in that way a more nuanced look at the impact of shifting your electricity generation. All eyes turned. Yeah, there was a study done fairly recently and I wish I remembered the details of it. It was looking at the health costs, essentially of coal fire power in the state of Michigan and they're pretty high. Unfortunately, most of these kind of analyses don't take those into account. They just assume companies meet the regulations that are in place, but if our regulations don't fully internalize the health costs of, say, coal, then coal's getting away with a cheap deal as it has for a very long time. In my understanding is there are a couple of very old coal plants in the DTE service territory. They got grandfathered into the 1978 Clean Air Act. So grandfathering means they got exempted from the requirements and everybody thought these old coal plants will just die a natural death very soon, but what companies figured out was if they can just keep these things limping along, they don't have to put all the modern pollution control on them. So they're getting an especially good subsidy by running these 75-year-old coal plants without modern pollution control equipment. Now, apparently DTE is planning to retire a couple of those and consumers energy is planning to retire seven relatively small old coal plants. So we'll all get a benefit from those, but yeah, I think the health impacts remain underpriced in all of these analyses. I think that was very well said and the only thing I would add is whoever wrote that, check out resources for the future. I'm sure that you could find a couple of publications there on that topic. I have far more cards left in my hand than we have time for. I think we have time for really only one question. I apologize to all of those who wrote questions and we will not get time for it. Well, my understanding is all of the presenters will be here for more informal conversation immediately, immediately afterward. And we will be assuming permission of authors be posting the presentations on our website. That was a question that came from one of you. There are actually several questions here at the draw on experience outside the United States. I'm gonna try to synthesize those. What we know about the experience of trying to increase renewable energy at a large rate if one looks at member states of the European Union or other nations. What it means for generation, cost, the intermittency, the need to provide supplemental supplies. If we look beyond American boundaries, whether it's neighboring Canadian provinces or the European Union, is there anything we can say and draw some lessons for the evolving Michigan case? Well, in a lot of other countries, they don't use renewable portfolio standards. The most common alternative policy probably is the feed-in tariff, which Germany has used to what you could call great effect in the sense that it's brought a lot of renewable energy online relatively fast, but it's been at a very high cost. So Germany has paid something like 50 cents a kilowatt hour for a lot of the renewable energy that they've brought in through the feed-in tariff. And our average price here in Michigan is something like 11 cents. So they're paying five times that for solar. So it was a calculated decision to build a solar power industry within Germany and it came at a very high price to energy consumers and they are now backing away from it, thinking they've built enough of an infant industry now in Germany that it doesn't require the same levels of support. So in some sense, it's basic economics. If you pay enough for anything, you can get people to produce it. Sure, the US really has been the pioneer with the renewable portfolio standard. Just in the past five years or so, we've seen a ton of countries adopt their own, but there's not, nobody has enough experience to date. It's even questionable whether the US has enough experience today to really know the full effects and effectiveness of this policy. But I would echo that the feed-in tariff is another example as well as cap and trade programs. And those are the two major policies that we've seen actually have a very positive effect in terms of renewable energy development internationally. And here in closing, I can't help but note, especially given the reference to feed-in tariffs, actually goes back to your point earlier, Tom, that the overwhelming consensus across policy scholars, economists, and even very diverse presidential administrations is that some kind of a pricing mechanism through the form of a tax or something like that would probably be a far superior policy option. That option to put a carbon price or an energy tax on the ballot is an option in Michigan and any other state. But the last time I looked, no state had done it. There was no aggressive pressure. Indeed, we had earlier today a visit by Frank Zarb, who was Gerald Ford's energy czar in the 1970s, and made very clear that one of the goals of the Ford administration or recognitions of the Ford administration, even then, with looking at natural gas decontrol and other areas, is that only by raising the price do you really provide a really substantial trigger. This is one of these interesting issues where we engage between what is economically feasible and what is politically feasible. And so we continue to explore what seems to be within the realm of political feasibility, and that is a renewable energy mandate. It's my sincere hope that this has been an illuminating exploration as we begin to contemplate the last stages of this campaign. I very, very much want to thank our speakers, our panelists for very thoughtful presentations and comment. And please join me in thanking them and do feel free to come up and engage in more informal conversation. Thank you all.